If a buyer doesn't close, can I keep the 10% deposit?

Asked by Rob Alinovi, Raleigh, NC Fri Oct 5, 2007

I have a signed contract and 10% deposit for the sale of my home in Long Island NY. If the seller doesn't close do I get to keep the entire deposit? The buyer's lawyer has indicated that his client may not be able to close.

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11
Jerry Cibuls…, Agent, Southold, NY
Wed Aug 10, 2011
The deposit they placed upon signing the contract is the financial responsibility to assure they complete the obligations of the contract and close on your home. Your attorney will be able to advise you on the contract details.
0 votes
Jamal Hadi, Agent, Scarsdale, NY
Fri Feb 13, 2009
It all depends. Usually yes unless they get denied for financing.

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0 votes
Stephen Maha…, , Valley Stream, NY
Wed Dec 3, 2008
You should seek this advice from your attorney. Specific performance can be touchy depending on the terms of your contract. I'm sure it will all work out,....best of luck
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Kathleen A.…, , Rockville Centre, NY
Wed Dec 26, 2007
From a New York Attorney perspective, it depends on the terms of the Contract. A typical contract in the NY metro area may contain a few contingencies but the usual "out" for a buyer would be the mortgage contingency or appraisal issue.
If the purchaser can be held in default according to the terms of the contract, you should be entitled to the entire down payment. Our contracts typically set the amount of the down payment as the liquidated damages.
0 votes
Jane Compagn…, , 15228
Wed Dec 26, 2007
I suggest that you consult with your attorney to determine if you are entitled to the deposit based on the terms of the contract.
0 votes
Ute Ferdig, Agent, Newcastle, CA
Fri Oct 5, 2007
Hi Rob. I deleted and corrected my earlier answer. The new word creation was a result of an accidental cut and paste job. Thanks for bringing it to my attention.
Web Reference:  http://www.go2kw.com
0 votes
Ute Ferdig, Agent, Newcastle, CA
Fri Oct 5, 2007
Hi Rob. You'll have to look at the contract. If the buyer can cancel for good cause, most likely you can't keep any of the deposit money. If the buyer defaults after having removed all contingencies, you may be able to keep all or some of the deposit money depending on whether your contract contained a liquidated damages clause. In CA, the maximum allowable amount of liquidated damages is 3% of the purchase price. Thus, even if the buyer put 10% down as earnest money, you would not be able to keep the entire deposit money even if the buyer defaulted. Ultimately, your question can only be answered by an attorney who can review the contract terms.
Web Reference:  http://www.go2kw.com
0 votes
Rob Alinovi, Home Seller, Raleigh, NC
Fri Oct 5, 2007
THANKS FOR THE QUICK RESPONSES.

Ms. Ferdig what is "limitedcels" (found in your sentence..." if the buyer can limitedcels for good cause....."
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Maria Cino, Agent, Valley Stream, NY
Fri Oct 5, 2007
I would really suggest that you speak to your attorney. Most contracts call for you to keep at least part of the down payment If there was willful default on the buyer's side. Most contracts have a mortgage contingency clause, which means that if they we unable to obtain financing that the contract is null and void.

It has also been my experience that usually both parties in the dispute end up making a settlement if the buyer was found in default.
0 votes
Erin Stumpf…, Agent, Sacramento, CA
Fri Oct 5, 2007
Are you referring to an actual 10% deposit, or is the buyer planning to put 10% down. Have the funds already been deposited?
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Brett Dunne -…, Agent, Upland, CA
Fri Oct 5, 2007
Rob:

Is this a land contract, Letter of intent or Purchase Agreement for an improved property on a State Real Estate form?
Web Reference:  http://www.DayBreakGroup.com
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